Uganda seeks $500m loan from China to link oil site

Mark Ssali, the Head, Public and Corporate Affairs at Uganda National Roads Authority, said on Wednesday in Kampala that there had been some contacts with Exim Bank (of China) for the loan.

Ssali said the authority needed the money to build 580 kilometres of roads around its Albertine rift basin along the border with the Democratic Republic of Congo.

“There have been some contacts with Exim Bank (of China) for the loan.

“But we are currently procuring a Chinese contractor, which is a precondition for any concrete talks with Exim,’’ he said.

Uganda has discovered an estimated 6.5 billion barrels of crude reserves in the basin.

However, lack of infrastructure such as roads and an export pipeline, as well as disagreements between the government and international oil companies over taxes, had repeatedly delayed production.

Uganda wants to start oil production in 2020, when a pipeline through neighbouring Tanzania is set for completion.

China has extended large lines of credit to Uganda in recent years, mostly for infrastructure, including power plants, roads and an airport refurbishment.

Officials have also said they are seeking 2.3 billion dollars to build a standard gauge railway.

Government critics and the opposition said the appetite for Chinese credit risks dragging the country back into the deep indebtedness of the mid-2000s.

“Given the accelerated borrowing and misuse of loans, we are likely to go back into debt distress,’’ said Julius Kapwepwe, the Director of programmes at Uganda Debt Network, a think tank that tracks Uganda’s public debt.

“We may start begging for debt forgiveness again.’’

According to Central Bank of Uganda data, the country’s total external debt stood at 10.3 billion dollars in May in 2016, compared to 3.8 billion dollars in the financial year ended June 2013.